Financial Statement

Auckland Star, Volume XXII, Issue 142, 17 June 1891, Page 2

Financial Statement

(by telegraph.—press association.)

Wellington, Tuesday. The Colonial Treasurer (the Hon. M r Ballance) delivered the Financial Statement in Committee of Supply, in the House of Repressfcativea, to-night, aa follows : —

Mr Perceval,—ln asking the attention of the committee while I place before it a plain, unvarnished statement of the iinancos of the colony, I hope to be as brief as the nature of the subject will permit, and not to weary hon. members by unnecessary details. CONSOLIDATED EXPENDITURE FOR THE YEAR 1890-91 (OKDINABY REVENUE ACCOUNT). The estimated expenditure for the year 1890-91, including the Civil List and other pirmsnenbcharges, amounted to £4,125,502; the actual expenditure was £4,175,193. There were savings in some classes of expenditure and excesses in others, but the net result shows an excess of expenditure over the estimate of £49,606, Under special Acts there is an excess of £19,140 arising out of the costs of two meetings of the General Assembly and the extra amount of compensation paid in carrying out the retrenchment proposols of tho present Government. There was also an excess of £14,659 in the amount paid to local bodies by way of subsidy on rates, the explanation in this case being that the claims were more promptly sent in before the clone of the year than was anticipated. In the Colonial Secretary's department there is an excess of £1.1,167, chielly for discount on drafts which was not provided in the appropriations of the year. This large item was no doubt partly caused by the high average of interest ruling in London. In the " working railways " the excess of £27,892 is explained by the Commissioners in a memorandum attached to their estimates, and which they state arose from the necessity of employing additional hands, from the rise in the cost of fuel and stocks at the time of the recent strike, and by increased traffic. Under the head of " .(Minister of Defence," the expenditure exceeded the votee by £14,712. Tho Committee will remember that £7,000 war, taken off these votes in Supply, but no saving was effected. Of the excess, £3,000 was incurred through fche labour troubles of last 3 T ear. The other increases principally arise from payment for arms and ammunition not sufficiently provided for in the votes. "Services nob provided for" amounted to £10,410. A large amount of this represent.-} compensation and compassionate allowances granted to officers and widoTjra of men of tho defence and police departments, which could not be paid under the provisions of tho Civil Service Act, ORDINARY REVENUE. The late Government estimated the reYomiQ to bo received ab £4,159,000, which included £55,000 for primage duty for the whole year. It will, however, be in the recollection of fcha Committee that it was datormined to discontinue the collection of the primage duty ab the end of last September. The revised revenua to bo received was accordingly £4,131,500, instead of £4,159,000, aa beforestated. Theactual amount received was £4,282,504, or £151,004 in excess of the revised estimate. With the exception of the revenue delived from the depasturing licenses, ell tho heads of revenue have been exceeded, Fnll particulars will be found in the table attached. EXPENDITURE AND THE REVENUE OF THE LAND FUND ACCOUNT. ' The estimated expenditure was £115,680; the actual figures are £116,108, or £428 in excess of the esbipiafie,,,. The estimated revenue was £96,600, while the actual receipt came to £164,270, or £67,670 in excess of the estimate. Large quantities of land in tho Canterbury district were sold for cash, but the lands available for disposal in this way have been nearly exhausted, and even were the policy of wholesale disposal for cash justifiable ib would be impossible to obtain the same amount ot revenue from this district again. As an illustration of what I mean the value of land sold ,for cash in Canterbury last year was £65,929, while the estimate for this year is only £4,000. The laree excess of cash receipts during the year provided a balance sufficient to pay off the deficit of £45,716 ab the commencement of the year, and to have a surplus of £2,445 at fche close of the year. RESULTS OF THE YEAR 1890-91. At fche beginning of the year a surplus was shown of £36,56S 19s 4d, after paying ofi the balance of the deficit at the 31st March, 1888 (£78,605 0s 8d). As I before stated, the receipts amounted to £4,282,504 9a 7d, making a total of £4,319,073 8* lid available for expenditure. During the year the total expenditure amounted to £4,175,107 13s sd, thus leaving a surplus of £143,965 15s 6d on 31st March laafc, a result which musb be xerj gratifying to the Committee. THE PUBLIC DEBT. The gross public debt on the 31st March, 1890, was £38,667,950, and the sinking fund's accrued amounted to £1,386,186 (as revised after the receipt of the English accounts); the neb public debt was therefore £37,2:81,764. On the 31ab March last tho gr is public debt was £38,832,350, showing an' increase of £164,400 during the pasb year Tho sinking funds accrued were estimated ab £1,473,193, and the neb dsbb therefore stands ab £37,359,157. The prosent conversion operation papers will belaid before hon. members, showing what hasbeen done, and what is contemplated with respect *o the conversion of the remainder of our intere3fe-boaring loans, amounting to £868 900. Debentures surrendered for the conversion of the loan of 1863, due on the 15th March last, had to be deposited ab the Bank of England, and not later than the 14th of March, and all other debentures pn or before fche 15fch June next. The Government have reserved the right to converb into 3i per cent, inscribed stock (with assent of" holders) any debentures not brought in for conversion, on terms to be notified from time to time at the Bank of England. The stock agents have been able to make exceedingly satisfactory arrangements with the Bank of England, whereby the success of the conversion will be assured, and I need scarcely point out the saving that will be effected. PUBLIC WORKS FUND. Parbl • The balance ab tho credit of this account 'on bhe 31st March, 1890 including an asset of £87,974 Is 3d under the Government Loans to Local Bodies Act, 1886. wag £233,675 Us 10d. During the year it became necessary to issue £24,000 debentures on account of the asset above mentioned. Some miscellaneous recoveries were also received, amounting to £5,781 4s Bd. The expenditure during the year amounted to £128,810 18s 9d, thus leaving at the close of the year an available balance of £110,643 17s 9d The outstanding liabilities are returned ab £96,608 3s lOd. Part 11. (North Island Mam Trunk Railway Loan): The balance to commence fhe year was £386,985 9s The ££»&£» during the year amounted to £30,891, thus leaving an unexpended balance oi £356,100, subject to £44,902 19s for outstanding liabilities. The allocations of this balance are as follow-.-For railway purposes, £232,424; for roads to give access to railway, £34 6521; purchase of native land, £83,831. lne liabilities against the railway amount to £26,103, and against roads to iiS./yy. Part III.: At the beginning of the yeav the balance was £426,305 15s 4d. During the year the expenditure amounted to £175 462 7s 6d. The balance at the close of th'e'year was £251,343 7s lOd, and out-

standing liabilities, £98,875 19s 3d.

SUMMARY

Taking the three parts together, the available balance ab the beginning of the year was £1,047,466 16s 2d, which ;vas increased to £1,053,248 0s 10d by some small receipts. The expenditure during the year amounted to £335,151 15s 3d, and the available balance at the close of the year to £718,096 5s 7d. The outstanding liabilities on the 31sb March lasb are stated at £240,387 2s Id. WEST COAST HARBOURS. I may inform the Commibfcee bbat the available cash of the public works fund has during the past five years been used to purchase further debentures issued by the Westporb Harbour Board to the amount of £17,000. Tbia Board has Parliamentary powers to issue debentures to tho amount of £500,000, and has availed itself of the law to fche extent of £150,000 raised in London (guaranteed by the colony) and £171,000 raised in New Zealand The revenue derived by the Board after paying working expenses, and providing for interest and sinking fund on the borrowed money, yields a fair margin which is expended on improvements, it is the opinion of the Government that the works for which money ia being found are of a substantial, urgent, and valuable character, and ao long as the Government considers the expenditure is being prudently conducted, and the limit allowed by law is not exceeded, they deem it their duty to assist as far as possible by providing temporary advances pending the sale of the debentures in the open market. With reference to the Greymouth Harbour Board I may remark that when the presenb Government took office they found unauthorised expenditure amounting bo £11,953 for advances made to this Board, the Board having exercised fche limit of its borrovring powers, amounting to £150,000, under the Greymouth Harbour Board Act, 1884, and having represented to the Government from time to time its urgent necessity to carry on works of considerable importance for the improvement of bhe harbour. The proposed works having been favourably reported on by our engineer, the Government have continued bo advance bhe necessary funds, retaining bhe Board revenue derived from bhe mineral, traffic, and land endowments. Of the sums advanced fche neb amounb now outstanding against bhe Greymoubh Harbour Board is £10,354. As it will be absolutely necessary to carry on the works already begun bo a successful completion, further borrowing powers will require to be obtained by the Board. A Bill for this purpose will be introduced to raise an additional sum for bhe prosecution of necessary and urgent improvements in tho harbour. SINKING FUND. Under section 90 of the Consolidated Loan Act, ISB4, it is enacted that after redeeming such debentures as may have been issued on account of increase of sinking fund of loan in respect of which the sinking fund has been set free, the balance of such sinking fund shall be paid into the public account,'and shall form parb of the public works fund. Until the loans of 1860 and 1863, falling due this year, hare been fully converted or paid off (the last parcel of the loan of 1863 is not due till 15th December next), it is impossible to estimate with any certainty the amounb of the sinking fund accretions which will be payable into the public works fund. I may state that bhe loans having sinking funds which mature during the year amounb bo £491,100, and that the debentures, fimounting to £178,924, issued in respect of the accretions of the sinking funds of these loans, are now outstanding. It is fair to assume that the accumulated sinking funds will, ab least, equal in amounb the loans for which they were created. We may, therefore, safely calculate upon receiving more than £300,000 into the public worke fund, without taking into consideration the profit ;derived from the sale above par of the sinking fund securities, which have been mainly invested in our 4 per cent, inscribed stock. I propose later on to show how £100,000 of this amount may be specially applied to 'discharge an obligation, thus leaving a balance of £200,000 this year available for public works, the appropriation of which will be fully explained by my colleague in his statement. It will be seen thab we have nob estimated for receiving a larger amount of sinking funds from the conversion operations than will be actually available in the present year, but if the operations extend to loans falling due in future years, the sum roceivable will be proportionately increased. Of course, in sbating these figures, hon. members will understand that the conversion scheme embraces the substitution of 5h per cent, inscribed sbock for the unconverted portions of the loans as they fall due, whereby the whole of bhe accumulations of the sinking fund are seb free and become available. ORDINARY EXPENDITURE FOR 1891-92. For the year ending 31sb March, 1892, I have had very careful estimates prepared, and they will be laid before you. The expenditure as proposed will be found to amount! to £4,155,105. Under bhe head of interest and sinking fund there ia an increase of £34,687, mainly arising from an abatement lasc year of £15,750 from the amount payable on the new 3£ per cant, inscribed accounb, of fin overlap of interest on the ten-forty debentures paid off. A new item of £8,856 has been provided for sinking fund ab 1 per cent, on the amount borrowed under the Government Loans to the Local Bodies Act, 1886. In order to carry out fche provisions of the Acb appropriations are increased ; .also under the head of a special Acb for the lirat fcime we had to provide a sum of £22,000 for the payment of our contribution towards the maintenance of the Australian Naval Squadron. An increased sum of £8,000 has been provided for compensation under the Civil Service Act, while £8,000 has also been added for payment of subsidies based upon the actual payments made lasb yoar. Coming to the annual appropriations, ib will be found bhab excluding working railways very substantial reductions have been effected in the I ordinary departmental expenditure. Pro- ' vision, however, has had «o be made for exceptional services, such as the census £12,500, for the Triennial Property Tax Assessment £13,000, and for discount on onr remittances to London £3,500, the want of provision for which last year caused the Treasury vote to be overdrawn. Nobwifchsfcanding these extraordinary votes, the estimate of expenditure for 1891-92 is £45,393 less than the expenditure of 1890----91. It is necessary to refer specially to the small amounb estimated for the cost of remibting money to London, £3,500, compared with the amounb spent last year on the same item, namely, £12,435. I have entered into an arrangemenb with fche Bank under which bills at 90 days instead of 120 will be issued at par on London. The effect cf fchia arrangement, if ifc had been in operation on our finance last year, would have been a saving, the Treasury has calculated, of upward of £4,000, and if obher th:ingß are equal, of course there will bo a similar saving this year. EXPENDITURE AND REVENUE OF THE LAND FUND ACCOUNT. The estimated expenditure for the current year amounts to £116,965, whereas lasb year provision was made for £115,680. Although the present estimated expenditure slightly exceeds the amount voted last year (arising out of the necessity for employingadditional surveyors and the charging of salaries heretofore paid out of the loan),, a very considerable saving has been effected by the amalgamation of the separatedepartments of Crown Lands and Surveys, i have not thought ib ' prudent to estimate the revenue for the current year at. more than £92,700. Lasb year ib w"as estimated afc £96,600. The ex- j cess of expenditure over revenue for the | curr6nb year according to fche above figures

result 3in a deficiency of £24,265, reduced to £21,820 by the surplus of £2,445 ab the beginning of tho year." This deficit I shall deal with further on.

ORDINARY REVENUE OF THE YEAR 1891-92,

The estimate over ordinary revenue received will amount to £3,906,500, or £8,004 less than the actual receipts of last year. In addition to the above, there will be iseued in aid of revenue £282,500 for sinking fund increases as against £288,000 issued during the past year. Adding these together, our total receipts are estimated to fall short of lastyear'B actual receipts by the sum of £13,7G4. The revenue derived from " Stamps ,: is set down at £21,191 less than last year's receipts. Of this amount, £65,700 which has heretofore been treated as revenue will now be treated as a recovery in reduction of expenditure in connection with the San Francisco and direct mail services. Owing to the light grain crops 1 have deemed it prudent not to estimate more than £1,114,000 railway revenue, which is £9,322 less than was received last year. Some exceptional amounts swelled the miscellaneous receipts of the past year, and as I do not expect their recurrence I have set down this item at £43,000 instead of £49,004. On the other hand, I see no reason why there should not be an increase under the heads of Customs and beer duty. I have therefore made a slight addition over last year's receipts to both these items. I expect the general acceptance of our land settlement proposal will cause an augmentation of £22,918 over tho receipts of last- year, derived from depasturing licenses, rents, etc., usually designated our " territoral revenue." ESTIMATED RESULTS OF THE TEAR 1891-92, Aβ I have before stated, a surplus was brought forward of £143,965 15s 6d to commence the presenb year with, to which I add the estimated revenue for tho yoar amounting to £4,268,800, together £4,412,765 15s 6d. From this I deduct the estimated expenditure of £4,155,105, leaving a surplus of £257,660 15s 6d ab the end of the present financial year. POSTAL ARRANGEMENTS. The question will now suggest itself to the Committee—in what way can this surplus be best disposed of? It must have been recognised tnab the tendency of the age is to increase the postal facilities of the world, and to reduce the cost of carrying letters. The time is not far distant, we believe, when there will be an Imperial penny postage, probably within the next three years. The lose estimated by tho English authorities is not expected to exceed £75,000 a year. Of this amount a number of persons in England have offored to guarantee £50,000 a year, and public opinion is rapidly growing in the direction of adopting a minimum rate of postage as a means of consolidating or federating the various parta of the Empire. The postage at sent with Australia is 2d a letter, aud that to Groat Britain 2id, while to the suburbs of our cities and other parts of the colony the charge is 2d. So manifest an anomaly suggests a change in the direction of our proposals. The time has therefore arrived, the Government believe, when the penny post should be established in New Zealand. The cost of the reduction in the present year is estimated at not more than £40,000, "and from calculations and comparisons with tho colony of Victoria, where tho penny postage is already an accomplished fact, it is estimated that within three years from the present time, through the increase in the number of lebtars sent, the loss in the revenue will be more than covered. It is also intended to aek for power to establish the penny posb with the Australian colonies, and negotiations to this end are now being conducted by my colleague, the Pasfcmaster-General. If this extension of the penny post be adopted, fche immediate los 3 to the colony in revenue will be about £1,200 a yean The Committee will agree that this is not a formidable sum to secure so great an advantage na an intercolonial penny pose. The postage on newspapers to the other colonies, now a penny, it is proposed shall in future be one halfpenny, and it is anticipated the increased number posted will prevent any material loss of revenue. It is also proposed to reduce the telephone charges to a uniform rate of £5 a year, which we believe will nob entail any material loss to the revenue, as the increase in the number of connections in consequence will probably be large. The details of these and other reforms in the Posb and Telegraph Office will be explained by the PostmasterGeneral. The question of SETTLING! THIS LAND and carrying on the work of colonisation in the making of roads to open up land for settlement will have, we think, to be borne in future to some extent by the consolidated fund. Whether this can be done will depend, of course, on the progress of the colony in the way of yielding an increasing revenue, but it will be recognised that the connection is intimate between a growing revenue and the extension of settlement. We propose, therefore, in the present year to apply the sum of £30,000 out of revenue for the work of opening up land for settlement. This amount will probably have to be supplemented by a vote from the public works fund. We propose to remit the native lands duty on leases, amounting on the average to about £6,000 a year. There appears to the Government to be no justification lor imposing an exceptional duty upon the alienation of native lands for settlement, a work that ought tobeencouraged rafcherthanrestricted by the imposition of a duty which is irritating, and at the same time difficult to collect. I have not disturbed the distinction which has been made between territorial revenua and the land fund, though I can hardly see any reason for its continuance. Ib iv true the land fund in the past has been subject to strange and serious perturbances, throwing out all the calculations of the department, bub the elements of uncertainty have in recenb years baen reduced to moderate dimension, and the consolidated fund, to which both descriptions of revenue legally belong, musb soon receive back its erratic and wandering child. The land department has made a calculation of tho sum it will cost in surveys and administration to obtain the territorial revenue in the present year, and the estimate is £40,000. In the past the land fund has improperly borne the corresponding charge, and this has tended vory often to produce a deficit in the fund. There is an estimated deficit in the present year in the land fund through the probable decline in cash sales of £21,820, which I propose to meet by transferring a similar amount from the ordinary revenue account, which will come out of the estimated surplus. The simple and direct plan of dealing with the matter is to amalgamate the ordinary and land fund accounts instead of maintaining tho distinction which has been made for many years. This would have been dona in the present year, bub that I desired to preserve the usual comparisons. The Committee may remember that my predecessor made a proposal in ISB7 to pay out of the sinking fund accounb under the Consolidated Stock Act, 1884, to the amount of £40,000 a year, tho deficit of the year 1888 amounting to £400,000._ It was also proposed that any credit balance of ordinary revenue, from year to year, shall be devoted to the same purpose instead of being carried forward to the next account. Short-dated debentures were issued to cover the deficiency. The debt sfcili remains, the arrangement to extinguish it not having been put in force. We now propose to apply £100,000 of fcho surplus of the year to the reduction of this debt. We propose bo place a tax.of 2£ per cent. on the money passing through the totalizator, which will amount to about £10,000 a year, and for the remainder Of the present year to about £5,000. These various propoeale I ehnll now brinp together to

show the financial result :—Cost oi penny postage, £40,000 (1 do nob include the intercolonial post-ieo, as the negotiations are not completed) ; £60,000 for opening up land for settlement, £6,000 duty on native leases, £21,820 to meet estimated deficit in land fund, and an appropriation of £111,000 to pay off the debt incurred in ISBB bo meet the deficit of that year. Tho total of these various amounts ia £197,820. Deducting this from the estimated surplus of £257,660, we have a nob surplus available to carry forward of £59,840. To this has to be added the tax on the totalisafcor, amounting to £5,000, bringing up the surplus for the current year to £64,840, which will bs an ample margin to provide for the supplementary estimates and possibie contingencies, REVENUE RESOURCES. A table attached to this Statement shows the revenue per head of population derived from some of the main items of the tariff, and points to the fact; that ib will be impossible to depend in the future on fcho increased consumption of alcoholic liquors to strengthen the consolidated fund. Thie facts is gratifying from a temperance view, and I only point ib oub in order thab wo may guard against undue reliance on what is termed the elasticity of fche Customs revenue. A time of great prosperity, high wages, and constant employment for the labour classes, will bring with if-, no doubt, an enlarged consumption of luxuries, and on tho whole the Customs revenue, undor such circumstances, will continue bo increase, but not rapidly, nor to a great extent, more especially as the colony will continue to manufacture more and more of those articles well within the limits of protection undor the tariff. Stamps will, as greater wealth ia diffused ameng the community, continue to give a yearly increase, and musb be considered as ono of bhe pillars of our financial system. The railways can never, I think, be relied on for revenue purposes ; if they pay interest on the cost of construction, they will do all thab need be expected, as any oxces3 ought to go in the way of reducing the coat of production and of lower rates of carriage. Direct taxation in the way of a land and income tax muse remain with bhe development; of our industries a fruitful source of income, and an equivalent of tho amounb obtained from fche present property tax may for some time be a necessity. When the nature of our obligations will permit ib, we are of opinion bhafc relief should bo given on fche necessaries of life now paying duties through the Customs, but we must be certain while fche great object is being reached thab we shall have sufficient revenue to meat the growing demand on the consolidated fund arising through the cessation of borrowing large amounts of money in the English market), for if we are to maintain our credit aud financial independence, borrowing in thab market must ceaso, while any local borrowing is likely to bo confined to" the absolute necessity of carrying on thO3o essential works of colonisation, such as the settlement of tho people on the land, on which depends directly the prosperity of tho community. On the"other hand if tho machinery of Government could be simplified and judicious retrenchment carried to its proper limit, the expenditure side of the account might efcill be considerably reduced, but we are strongly of opinion thab any material reduction must come from a more direct and simple form of adminisbration directed to bhe attainment ot practical ends, and it will be necessary to sco that our measures of legislation do not include liabilities which will render this form of economy an impossibility. THE FLOATING DEBT. The amount of the floating debt incurred to meet past deficits is £550,000. This will be reduced to £450,000 by the appropriation of £100,000 of the surplus of the year. as already explained. Can this floating debt be further reduced? The Government think that though by law tho released sinking funds in connection with the loans undergoing conversion pass into the public works fund, a portion of them should be used to pay off debt which was incurred bo aid the revenue, and I propose to transfer from the public works account £100,000 of the sinking fund set free, thus in the present year reducing the floating debb by bhe sum of £200,000, and leaving outstanding £350,000 to be dealt with in future according bo tho state of oui , finance*. I have also to add £128,605 paid off mainly by the primage duty to the £200,000 now proposed to be extinguished, and we shall then have effected a reduction in this species of debfc amounting to £328,605. The aid to revenue in debentures issued against the sinking fund increases, belong to a difforenfc category from what I have been explaining. These debentures musb nearlyall be paid off by a self-acting system according bo law. As I have shown, aboub £179,000 will be available through fche conversion operations to redeem debentures in the present year, in addition to the sinking fund released from the drawing loan of 1867, amount; to £146,000. The nature of the complicated and ingenious operations under the Consolidated Act, 1884, is such that while we aro issuing debentures in aid of revenue, in anticipation of fche sinking fund falling , in, we are at the same time paying off debentures already issued. In ths present year we issue £282,300, and shall pay off about £325,500. THE CIVIL SERVICE. Tho Government recognise thab vigorong measures are required to place the Civil Service of the colony on a satisfactory footing. They have discovered that departments have been overmanned, and no their work imperfectly, and bhey have had bo apply the" pruning knife of retrenchment. The operation ia always bo bo regretted, for very often hardships result. The task of reducing the service afe the risk of depriving familios of their means of subsistence ip ono from which most men shrink, bub ib has w be done. The justification is fchab the welfare of bhe whole community demands the most rigid economy in bhe administration of its affairs. It is a fact thab the Civil Service has been disorganised and quite powetless to do anything bo help itself. To be economically administered, tho service must be under one administrative body, and ab leasb, in bhe lower grades, bhe officers musb be interchangeable in the different departments. Retrenchment, to be effecbive, must go on continually ; thus, when an officer dies or retires, fche question should always ba asked, has an opportunity occurred for promoting greater economy and efficiency ? Every promotion should mean both ; fer economy does nob mean cheeseparing iv salaries, bub getting the right man in the right place. Is ib posible to have a Civil Service in which bhe country shall have confidence ? The Government believe that the Civil Service Bill, which will be shortly introduced, has in ife such elements of sound reform as will enable this question to be answered in the affirmative. Ib asks the heads of the service bo accept the responsibility of advising the Minister, and it infuses fche principle of unity by placing the service under the charge ereafcly of a particular Minister, whose special duty ib shall be to promote its true interests, which cannot be considered apart from fche interests of fche country. We believe great reductions can etsill be mada in the cost of the service, but they ought to be made in tho way I have mentioned, gradually. It is hardly necessary to add that the welfare of the country demands a highly organised, intelligent', and patriotic Civil Service. To attain this end, ifc is tho duty of all parties to combine. THE GOVERNMENT INSURANCE DEPARTMENT. During bhe recess I have madeinquiryinto the management of the Government Insurance Department, and I have come to the conclusion that the institution is conducted with ekill and success. Economies hava

been effected during the year which reprosentatofcalof between £4,000 and .15 000 on the actual expenditure, and tho work of iu dicious retrenchment is still proceeding. During the last few months an agreement has been entered into between tae different life insurance companies doing business in tho colony not to interfere with each other's operations and I anticipate in consequence a higher sfcandavd will be obtained in the carrying on ot that particular class of insurance work known as canvassing The quinquennial "cconnte have been oompleted and emitted to the actuaries in London, and the policy-holders may expect to bo in possession at no instant date of fch® moat gratifying end convincing assurance of th 9 vitality ot the SSion. Iα order to cover any unsouna investments a reserve of £&>,OOO Las been set aside. This amount) is nob included in the accounts forming the basis of the actuarial investigation, and here I may obeervo that there seems no reason to conceal the fact that during the period when tho Government Insurance business was under the management ot the Board, some bad investments were made from which losses are likely to accrue. Tho probable extent of these losses, however, is amply covered by the reserve mentioned, and the institution remains sound and prosperous. THE PUBLIC TRUST OFFICE. Theßoyal Commission appointed to inquire into the working of the Public Trust Department), has made a thorough investigation, and many reforms in its administration will no doubt be suggested. It would bo nothing short of a national calamity were public confidence destroyed in t.ie institution, but publicity even to the extent of exposing grave defects is rather calculated to reassure the timid than to permanently weaken public faith. There is no reason why tho Public Trust Oiiice should not bo as well administered as for instance the Post OiEce. It is purely a matter of organising power ana capacity, without which qualities neither laws nor regulations nor checks will achieve salid results. It is probably a mistake to have an officer at the head who in some indefinite way is responsible only to i arliamont, which virtually means no responsibility at all, for the saying here is peculiarly applicable, that what is everybody's business is nobody's business. Whatever is done, tho Public Trust Officejmusti be placed in a position to regain if it lias lost, arid to maintain when won, tho confidence ot tae people of New Zealand. SETTLEMENT OF THE LAND. My colleague the Minister of Lands will ask tho Legislature to consolidate and amend the Acts relating to the disposal of the Crown lands. The limited quantity of the public estates still available for settlement suggests the necessity of providing that in future the bonafide settlor shall be considered before the speculator and tho monopolist. That the country may know tho actual state of affairs, I submit an estimate by the Surveyor-General of the agricultural land still available in the hands of tho Crown. "The remaindor," ho says, "of tho agricultural land in New Zealand is bo interspersed with country fit only for grazing stock, that it seems most fair to class both as one, for the low grazing bush land of the North Island especially can ba most profitably occupied in conjunction with the emc-.1l areas of purely agricultural land within them. On this basis tho lowlying pastoral and agricultural land lit for settlement amounts to 2,850.000 acres." In a table accompanying this statement will be found the figures showing tho distribution of this land throughout the several provincial districts. The Committee will probably agree with me that when we consider that upwards of sixteen million acres of the best land have already been alienated in feo simple from tho Crown, there is some reason why tho remaining available estate of less than three million acres should be administere d in the interests of the wholo people of the colony. The time, it is believed, has arrived when suitable areas will have to be purchased by tho Crown for small farmers. In many * parts of the colony the Crown lands available for this purpose have already disappeared, and if the population is to be retained, tho wants of intending settlers will have to be met. A Bill will be introduced hedged round with tho necessary safeguards to establish a satisfactory system of purchase. If borrowing in t.ho English market is to be discontinued, the means will have to be provided for carrying on the work of settling the waste lands of bhe colony. Recognising this fact, tho late Government proposed to amend tho Government Loans to Local Bodies Act to enable money k> be advanced on the security of a special rate to be levied on the settlers. While there is merit in the proposal, so far as it relates to the means of providing the money, the present Government aro not inclined to favour a system which entails the payment of another special rate, bub we think that if money advanced under tho Act for opening up land for sale were made a first charge on the proceeds of the land there would bo ample security without entailing a liability on taxpayer*. lnetead of the complications arising from assessing tha rates to be borne by tho land, we propose tho simple plan csf procuring an estimate by the SurveyorGeneral of the half of a block of land when surveyed and placed in the market, with an estimate of the cost of roads to open it up, whereupon tho Minister of Lands'would be placed in possession of tho funds to the limk of one-half the estimated virtue of the land when it was ready for disposal, the funds borrowed for this purpose to be repaid out of tho proceeds of land. The Government think an amendment of the Act in this direction will give a fresh impulse to colonisation. NATIVE LANDS. The necessity of providing for tho extension of estslernent by tho purchase of native lands will be seen from the limited quantity of Crown lands still available, and a vote will be submitted in tho public works estimates for the purpose. Bub while reserving to the Crown the right of purchase, the Government are of opinion fchab the time has arrived for an amendment! ot the law to enable the natives to leaio their land either direct to the Crown in perpetuity or through a Board in which they will have confidence under the land laws of tho colony, feo the settlers who are to occupy. Whatever is done therein by the natives under treaty in accordanca with the principle of justice must be strictly maintained. It will remain to reconcile by law the interest of tho native race, and of tho colony, so thp.b the beneficial occupation of native territory may be hastened and finally secured. « The Royal Commission appointed to inquire into this matter havo drawn up a comprehensive report after a conference with tho tribes, in which are explained and elucidated the provisions under which, in their opinion, this end may be attained. *Mr colleague, fcheNative'Minieter, has given the subject much attention, and will introduce a Bill for the consideration of the Legislature with the object of consolidating the numerous and complex native land laws into one concise and intelligible measure, and also of simplifying and reducing tho cost of the ascertainment of title and other procedure of the Native Land Court. The effect of this will, it is hoped, enable more rapid and satisfactory settlement of the surplus land now iying unproductive in the possession of the native?. INCIDENCE OF TAXATION. . I have now to ask the Committee to grant me their attention while I bring before it the question of tho incidences of taxation, more especially in its relation to taxes on land and incomes. What is a laud tax ?

Tho popular, and I believe the correct answer to the question is a tax on the value of land less improvements. This is the idea of the land tax school. Tho necessity tor stopping short of the ideal must be found in the imperative requirements 01 cur finance, tho need for providing smiicienb revenue to meet our obligations without unduly weighting the necessaries of life through'the Customs. Wo advance, therefore, just as far towards this ideal tax as the condition of a sound finance will pormib us, and if we stop short of what some mij'ht dtJ3ire, h must be remembered tint the'history of financial reforms and changes shows fchat the ends sought to be obtained were seldom, if ever, reached ab a siiii'le offorfc. We propoao to introduce a Bill to abolish the property tax, and to provido for a land and income tax, and in respeCu of the land Lax, to. grant an exemption on improvements up to the value of £3,000 .or each owner, and also to impose a graduatscl tax upon all persons and companies, the value of whose land, less the £3,000 of improvements, shall amount to £5,000. _ m ia estimated that the deduction ot improvements will cause a loss of revenue ot about £69,000, and the graduated tax:mu bring in an increased revenue ot j. have not considered ib advisable to suggest; a higher rate of graduated tax than fcnac stated in the table. The paymenb of the additional sum of £61,390 will foira an important extra tribute to the ievenue by the holders of large estates, ana it will bo paid by less than 3,0001 owners. In addition to the deduction for improremeats there is to be an exemption of £500 from owners' land, and it is not proposed to grant the exemption when an owner a land, less the deduction ho may claim, Will exceed £1,500. Thus, if a farmer has land worth £800, the improvements on which are valued ab £300, the exemption would mate him not taxable : and with land worth £1 200 and improvements £400, the taxable balance would be £300. In the assessment of the tax, owners will bo allowed'to deduct from the land the amount of any mortgages, and the mortgagee will pay the tax on the total of his mortgage at the same rate aa t.io owner on his land-that is, Id in £ ; bufc tile graduated tax will fall entirely on fcae owner, and ha will pay on the full value, less the allowance for improvements, l< or the purposes of the tax ib is considered that the mortgagee is a part owner of the land, and that therefore he should share with the owner the responsibility in tho matter of tho tax, to which principle, however, we make the graduated system an exception. But I may hero state that an owner will nob be asked to p/ty the land tax on the value of tho interest of any tenant who holds a lea=e in which he has a marketable goodwill. The tenant will be assessed with the value of bis interest. We propops to graduate the tax on the following scale :—On a total taxable value of £5,000 to £10,000, &d ; on a total taxable value of £10,000 to £20,003, lid; on ditto, £20,000 to £50,000, l|d ; on ditto, £50,000 to £190,000, lid ; on ditto, £190,000 and over, lgd. It will interest the Committee to know what a land tax is expected bo yield on this-system, supposing the ordinary tax to bo Id in the £. The result of an all-round tax of Id in tho £ on parsons as distinguished from companies has been estimated by the Property Tax Department at £177,595, and the graduated division of the tax on persons at £40,567. The all-round tax on the land of companies ab Id amounts to £27,361, and the graduated ab £15,323. If wo add bhesa atnouats together we obtain a grand total of £266,847. 1 attach a table giving the amounts that would be payable on estates held by persons and companies, and from this ib will be seen that more than £25,000 will be paid as a graduated tax in respect of tho land of owners each of whom has a greater Value than £100,000. These owners are less than fifty in number. As a strong and readily-grasped argument in favour of a graduated laud tax, I have had published with the table attached to this statement another giving , the proportion babwoen the numbers of those who own land and tho value held. This table deserves the most careful attention of ;.li who really desire to seethe occupation of our lands placed in a more satisfactory oolirlition, and it will convey a highly interesting lesson to those who habitually profess to" believe that landed property in this colony is so owned as to secure anything approaching tho largest possible production from it Touching the principle of a graduated laud tax, the Committee will probably desire to learn how ib 3 incidence bears on wealth compared with the taxation paid by members of the working classes. I will endeavour to show the amount of tax paid through the Custoin3 respectively by an artisan and a labourer, each having a family of five, tho former receiving 53s a week or £157 per year, and the latter 39s a weak or £101 per per year. The artisan would 'pay in duty £12 10s 4d, oqual bo 9*l per cent, on his earnings, while the labourer would pay £11 lls 5d or 114 per cent, on his earnings. This allows for no broken periods or for periods of sickness or non-employment, during which tho earnings might cease, while the payment of duty, ab least to some extent, would continue Loo us now sea what owners of laud worth £105,000 would pay in a graduated land tax, deducting £3,000 for improvements. A l§d tax would amounttio £690, cr about 9| per cent, on an assumed income of £7,350. In addition he mighb pay 5 per ceoto. on hia income to the Customs. The result illustrates how inequitable has been the system of bbc tax prevailing in this country, and exhibits one eflicienb cause of the tendency of wealth to accumulate rapidly in bho hands of a few. Assessments will be mace of both the improved and unimproved value, and it is hoped the effort will be mors successful than in the past to secure a fair and even valuation, for there is reason to fear that many of the larger estates have not been assessed ab their fair cash value. It is proposed bo give greater power to the Tax Commissioner, in order to ensure a more equitable result). Having dealt with the land tax and its incidence, I now coma to the consideration of a tax on incomtn derived from trade and commerce. Wo believe the propsrty tax to be grossly unjust in its operation, imposing without discrimination burdens on capital, whether productive or not, and discouraging industry. For this obnoxious form of taxation we intend to substitute an income tax of Is in the £1. There will be aa exemption of £150, and a dedution by way of abatement; of a like amount from incomes which do nob exceed£6oo. Companies will be 3ubjecb to the same rate of incomo tax, bub it will be understood in all cases where the income tax is charged thab ib will not bo levied on profits derived from land which ia reached by the land tax. Under bho heading of companies are included all joict stock corporations, banks, shipping, fire and marine insurance, and gold mining companies. There will not bo an exemption in the case ot companies. Tho revenue dorived will noc be so large as ab present, bet the incidence of the tax will be more equitable, and those corporations which are in a progressive stage will be treated leniently, while those thab are making large profits will pay proportionately. Life Insurance Associations are at present charged Id in the £ on tho amount of their fund's invested in the colony. THE INCOME TAX, propose to charge an income tax of Is ia the £ o:i the income derived, from personal property in the colony, but biio land tax will be charged on their land. It is estimated thab they will nob ba so severely taxed as in tho past, and the alterations will, I think, servo a 9 an encouragement bo invest in fch o colony, and will, I am glad to say afford some relief to institutions that; arts serving a most beneficial purpose. I v order to prevent misconception, it will ba well for -*ne to state distinctly that fcha

income tax will nob be levied on any income derived from land, or from money lent on mortgage. Such property r .viil be subject to the land tax only. In charging tax on incomes derived from professions and from occupations in which a profit is nob made from capital and on salaries, we pro; ess to : tempi nil incomes oi; £300 and under, ar.l to deduct I*3oo from all incomes above this amount. An income of £500 will, therefore, pr:y on £200, and an incomo of £1,000 on £700 with a rate of 3..1 hi the £ on .he iirsfc £200 over ihe exemption, and od in fciie £ above that amount. A person in periston of a £500 income wii! pay under • proposal £2 10s per annum; in pocsestiois o£ £600, ; -5 P er annum ;of £700, £7 IC'per annum, and so on. Considering the comparative independence oi those h> ]soasession of salaries or incomes above £300 a year, tho eni&liness of rho rate will cominsnd itself aa fair. On the other hand it will be recognised that possessors cr sneii incomes should not be flaked Uv contribute the same proportion ft; t : ;cio who derive their incomes from pro; 1 ::;;/. Referring generally to the alleged inquwiborial character of an income tax, 1 b<.£ to assure the Committee that I have given r.hia my most caroful consideration, and i fail to discover any reason why the assessment for an income tux should bo more vexatious to taxpayers than thab for property tax purposes, and I am convinced ih.at it will b*j possible bo so acjusfc bho mode of collecting as net to increase, at all events, the inconvenience cf the taxpayer. I have new to bring together the estimates of land ;md income tax of the amounts receivable under the different schedules of the Bill.

Land tax, including land and mortgagee under schedule A, £266,847.

Incomo tax under schedule B, including banks, life insurance, goldnrining, fire and. marine insurance, and other corojtasiee (omitting profits from land and mortgagee, and companies debentures other than mortgage debentures) £47,300. income tax under schedule C, from trade and commercial, £40,000. Income tax under schedule D, professions and salaries, £15,010. There amounts added together give a grand total of £369,147. " Pending tho results, however, of the triennial valuation of property, shortly to be mace, ib will be safe to deduct from total estimate 5 per cent, as a margin, thus arriving ab a total neb revenue of £350,690. Ab the end of the present year, the new system nob coming into force until next March, the different estimates will be revised in the light of the returns, and ItJ will then be possible to make a more accurate forecast of the receipts.

SUMMARY OF TAXATION SCHEME,

The proposals I have the honour of submitting to the Committee will tend, I believe, to adjust the direct taxation of the country in accordance with the capacity of the different classes of the community to bear ib. The exemption of improvements up to £3,000 on land affords a material relief to the farmers and improving land Dwners, while ib directly encourages thrift in conveying the intelligence that industry and labour no longer mean additional burden 3. The graduation of taxation on fche large estates in accordance with the principle of the equality of sacrifice, will act in the direction of placing a check on monopoly. New Zealand is a colony of comparatively limited area, and ib is for the people to say whether tho land, out of which all must live, shall be widely distributed, or whether it shall be held by a privileged number. Our policy, we believe, raises the issue in the most practical form, while ib will be seen not to be unfair, when we compare tho taxation contributed by different classes. The abstract fairness of an income tax on profits derived from trade and commerce has never been questioned. Our change in this respect gets rid of a number of exceptional taxes, which lest on no principle, substituting a single tax on profits realised. Tho comparatively light income tax under the head of salaries and professional incomes will fall only upon those who are in a position to "contribute ib without inconvenience, the exemption of £300 affording ample protection to all who will come within the limit of the schedule. If, on the whole, we have not gone far enough in the opinion of some, or too far in the opinion of others, we ask for thab consideration which would weigh fche difficulties of a largo and comprehensivo •change in the incidence of taxation, and the difficulty of providing sufficient revenue to meet the necessities of our finance, and as the same time relieving the industrial classes from the crushing effect of an unjust system. If we have nob accomplished all that some anticipated, our proposals, at least, will have gone a very great distance towards the end we ha»'e in view. Had the land tax of 1878 been retained and improved, •V7e should by this time have had perhaps the . fairest system of taxation of any country xinder fche British Crown ; but the retrogressive step taken a year later has produced bhe opposite result, and we are now In the position of those who have been ■wandering on the wrong path, and are forced to cautiously retrace their steps. It is ir. the light of this experience we submit our proposals with the full confidence that the country is ripe for them and will accept them.

RESULT OF THE CENSUS.

Before concluding, I consider it my duty to direct the attention of the Committee

to the lesson conveyed by the census returns of the population recently issued. Briefly, the rough result of the cansus,

as shown by the enumerators, gives a population, subjecb to revision, of 623,352 persons, not including Maoris, against 578,482 persons in March, 1886, making an increase for five years of 44,870. But the natural increase for this period, being the excess of births over deaths, is 64,163, so that the loss by excess of departures ■over arrivals is 19,298. The arrivals recorded in the five years were 75,386, and departures 83,948, giving a loss of 10,562 persons. It would thus appear that the ■unrecorded departures amounted to 5,736 persons. The real outflow of population from fche colony has evidently nob been returned to the Registrar-General in the monthly statement, and it is well known that—in the years 1888 and 1890 and of late ■—the sbeamere for Australia were greatly crowded owing to a disposition on bhe partof the population to leave mainly for New South Wales. Now here is a loss of wealth and wealth-producing; power in the departure of so many people from our shores _ to seek employment in other colonies, which demands the serious consideration of Par-

Jiament. We naturally congratulate ourselves on the increase of the exports, but the reason for congratulation suffers serious abatement when the discovery is made

that more people are leaving than are arxiving in the colony. If we cannob retain our population, we should know the reason •why, in order that the remedy for such a state of affairs may, if possible, be applied. The returns of the census took us all by surprise. No one imagined the loss had been so great, or that the exodus had made so large sin inroad on the New Zealand-born population. It is not satisfactory merely to repsafc

"the cry thab bhe cessation of public works has been the cause of the exhausting emigration which has been going on. Doubtless this may be one of the causes, bufc, if so, there is the greater reason to shape our policy to overcome the difficulty. It appears to bhe Government that the first thing to be done as to obtain an accurate knowledge of the facts. How many people are unemployed, •why employment does not exist for all, •whether labour should not be organised by the assistance of the Government co that ifc may be more equally distributed, and more easily rind employ'.'xnenfc; in a word, whab 13 wanted in this Tespecb is a system under which statistics may be furnished to a central office at frequent intervals, weekly or monthly, of the state of the labour market in every part of

the colon}'. The unemployed evil appears » to be centred principally in tho large cities to which men out of work seem to be attracted. As the first step in the treatment ;.of a disease is to submit it to a careful ■'diagnosis, so we must know the conditions surrounding the unemployed ;malady before we shall be able to overcome it. We are thu3 naturally led to ithe practical consideration of the establish- : »3nenb of labour bureaux in the different -centres of population under the charge of a of the' Crown. Having obtained four information, next step, of course, is to 'apply it so as to utilise this woalth in the tform of human beings who are wandering s' through our streets in search of work, or i.vrho are leaving us altogether because there no gleam of hope if they rojUnained. •\ CONCLUSION. I have referred to the cessation of public •j-vrorks as one of the aligned causes of the Oexodus. Does it not show that the method |of carrying out public works has been radijcally vijious, when they »io sooner cease those engaged in them are compelled ;, to emigrate. If the public work 3 had been if made Subordinate to settlement they would I have created a demand for population ; on *the other hand from the way they have a been conducted they have been inatrumenyj.tal in driving it away. I submit as a subject portheearnesticonsideration of the Committee $that not a mile of road or railway should be ] constructed by the colony in the future, ii-without provision being at the same time f.ixiade for the location of people engaged in j> the work on land, if possible, in the neighbourhood. This may mean a radical in the method of entering into contracts, and it certainly will entail more '♦direct responsibility on the part of the Government, bub it will transform into sturdy : settlers, with a stake in the country, a '•large proportion of those who, seeing *BO prospect here, are ready to embark for other lands. With a view to immediate relief, and stopping the exodus, we propose to pub in hand such public works as are of a reproductive character, and for which moneys aro available. Our first duty as legislators, it appears to me, is to see that it is made easier for the people to have - comfortable homes. A great aggregate ' of wealth may be builb up in the Jiands of a comparative few while the ~7"~r>" may be pauperised ; but this is not

civilisation, and it is nob a sign of health in a State. In the Financial Reform Almanac for 1891 we have the following appalling statement of facts:—"ln London one person in every live will die in fche workhouse, hospital, or lunatic asylum. In 18S8, out of 79,000 deaths in London 19,179 were in workhouses, 7,113 in hospitals, and 3SO in lunatic asylums; moreover, the percentage is increasing. In 1887 ib was 20 "6 of the total deaths, in 18S8 ib rose to 233. The increase was exclusively in the deaths in workhouses and infirmaries. Considering that comparatively few of the deaths are those of children,it is probable that one in every four London adults will be driven into these refuges to die, and the proportion in the case of tho manual labour class muet be still larger. The number of persons who die whilst in receipt of outdoor relief is not included. Tho number of pauper funerals is not given in fcho official returns, but it ia computed to be ab least one-third of the total number of deaths, and that in spite of millions of insurances in burial clubs and industrial insurance societies : and this is the civilisation of the most civilised and wealthiest cifcy of the world '." Well may we question the economical social system of which thi3 is the product. Should we nob seek to establish our civilisation in this new land on a broader basis, in a deeper sympathy for humanity ? Nor need we fear that in pursuing this aim we shall fail to reap thab material prosperity of which financial etatemenbs aim afc being the embodiment. Tho wide diffusion of wealth and industry among the people are the surest guarantees of a buoyant revenue and a healthy exchequer. I see only the closest relationship botween a people well placed and fully employed and a State enjoying bhe highest credit and discharging every obligation, moral and legal, imposed upon ib. In urging bhese considerations, we are reminded of a maxim which I believe to bo the essence of all sound financial and social economy, that tho safety of the people is the highest law, and demands the first consideration of the State. I have, sir, to return thanks to hon. members for their attention.